Buy to let mortgage calculator
How much the rent lets you borrow, worked out the way buy to let lenders test it, using the same rules as the Theo app.
Quick answer
A buy to let mortgage calculator works backwards from the rent. Lenders want the yearly rent to cover the interest by 125% for basic rate taxpayers and companies, or 145% for higher rate taxpayers, tested at a stress rate of at least 5.5%. £1,200 a month at 125% and 5.66% supports about £203,500, but most lenders also cap the loan at 75% of the price.
So on a £250,000 purchase, the limit is £187,500, which needs a £62,500 deposit.
Updated today
The rent test, in one line
Rent × 12 ÷ (cover × stress rate)
£14,400 ÷ (125% × 5.66%) is about £203,500. Then the 75% cap applies.
A buy to let mortgage calculator with live rates
Theo uses the best live buy to let rate for your deposit, checks the lender rules beyond the rent test, and Premium compares owning personally or through a company, on 2 and 5 year fixes.
Beyond the rent test
- IncomeOften at least £25,000 a year.
- HomeMany want you to own your own.
- Top slicingSome use spare income to cover a shortfall.
Is it worth buying?
Check the yield first.
Rent cover by how you own it
| How you own it | Rent cover | £1,200 a month supports, at 5.66% |
|---|---|---|
| Basic rate taxpayer | 125% | £203,533 |
| Higher rate taxpayer | 145% | £175,460 |
| Limited company | 125% | £203,533 |
Five year fixes test at the real rate
On a buy to let mortgage calculator, a 2 year fix usually supports less, because it is tested 2 points higher.
Buy to let mortgage calculator
Leave the rate blank to use the average buy to let rate from Theo’s rules, or enter a rate you have been quoted.
Enough for your £187,500 loan at 75% LTV.
How the buy to let mortgage calculator works
Buy to let lenders use an interest cover ratio, or rent cover. They take the yearly rent and check it covers the yearly interest, worked out at a stress rate, by a set margin. Rearranged, the most the rent supports is the yearly rent divided by the cover times the stress rate. The calculator then applies the usual 75% cap on the price and compares it with the loan you need.
The stress rate
Lenders test at a rate higher than you will actually pay, to allow for rises. Most use at least 5.5%. On 5 year fixes they usually test at the actual rate if that is higher; on shorter fixes they usually add about 2 percentage points, which is why a 5 year fix often lets the same rent support a bigger loan.
Rent cover and your tax band
Basic rate taxpayers and limited companies usually need 125% cover. Higher rate taxpayers usually need 145%, and additional rate taxpayers more again, because personal landlords can no longer deduct mortgage interest in full and so keep less of the rent. That is one reason many landlords buy through a company. See limited company buy to let.
How much deposit for buy to let?
Try different deposits in the buy to let mortgage calculator above. Most lenders need a 25% deposit, and a few go to 80% loan to value. A bigger deposit means a smaller loan, which is easier for the rent to cover, and can bring a lower rate. On a £250,000 purchase, 25% is £62,500, before Stamp Duty at the higher rates and fees.
When the rent falls short
Some lenders can use your spare personal income to top up a shortfall, known as top slicing. Others accept lower cover on 5 year fixes or for limited companies. An adviser who works with buy to let lenders can find the ones that fit. Check the numbers stack up with the rental yield calculator.
Common questions
How much can I borrow on a buy to let mortgage?
What is the rent cover or ICR?
How much deposit do I need for a buy to let mortgage?
Why do higher rate taxpayers need more rent cover?
Does a 5 year fix help with buy to let borrowing?
Keep exploring
Theo App Ltd is not authorised by the Financial Conduct Authority and does not give mortgage advice. This page is information only and is not a recommendation. Estimates from typical lender tests. Not an offer to lend or advice. Speak to an FCA-authorised mortgage adviser about your own circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.